Yet another Medicare insolvency date

Yet another Medicare insolvency date

Annual Congressional Budget Office projections issued Tuesday received widespread attention for the conclusion that federal healthcare spending will more than double in the coming decade. But less-discussed was another projection that insolvency will arrive in 2022 for Medicare's Hospital Insurance Trust Fund, which pays hospitals and providers of post-acute-care services under Medicare Part A.

That's two years sooner than the 2024 insolvency date issued last May by Medicare's trustees, who include members of the Obama administration. The discrepancy may stem in part from different methodologies used by the trustees and the CBO.

In fact, the new CBO projections are an improvement from those issued by the CBO last January, which projected insolvency for the trust fund in 2021.

Last year, the Medicare trustees blamed a five-year acceleration in the fund's insolvency date found in their own estimates on both reduced Medicare tax receipts stemming from the recent recession and rising healthcare provider salaries. The CBO report contained no explanation of one-year delay in insolvency over its 2011 projections.

The latest report concluded that the fund's non-interest annual income will increase from $230 billion in 2012 to $417 billion in 2022 but remain insufficient to keep up with spending that will grow to $444 billion in 2022 from $268 billion in 2012.

“CBO expects expenditures to outstrip income throughout the 2012–2022 period,” the CBO authors dryly note.